atnman  s 
ar  (Eastern  ^^lanis 


UNIVERSITY  OF  CALIFORNIA 
AT  LOS  ANGELES 


E.  H.  HARRIMAN'S 
FAR  EASTERN  PLANS 


MANCHURIA  AND  HER  RAILWAYS 


E.  H.Harriman's 
Far  Eastern  Plans 


By  GEORGE  KENNAN 


THE  COUNTRY  LIFE  PRESS 
Garden  City  New  York 


Copyright,  I9I7>  by 
George  Kennan 


I 


E.  H.  HARRIMAN'S 
FAR  EASTERN  PLANS 


if^^n'7i 


E.  H.  Harriman's 
Far  Eastern  Plans 

Mr.  Harriman's  direct  business  rela- 
tions with  the  Far  East  began  in  the 
year  1905.  The  aid  given  by  Kuhn, 
Loeb  &  Co.  to  the  Japanese  Govern- 
ment in  floating  its  war  bonds,  as  well 
as  Mr.  Harriman's  own  interest  in 
China  and  Japan,  based  on  his  connec- 
tion with  the  Pacific  IMail  Steamship 
Company,  early  attracted  his  attention 
to  that  part  of  the  world,  and  when  in 
the  spring  of  1905,  he  received  an  urgent 
invitation  to  visit  Japan,  from  the  Amer- 
ican minister  in  Tokyo,  Mr.  Lloyd  C. 
Griscom,  he  determined  to  suspend  for  a 
time  his  financial  and  railroad  activities 
in  the  United  States  and  look  over  per- 

3 


E.  H.  HARRIMAN'S 

sonally  the  Oriental  field,  with  a  view 
to  ascertaining  what  could  be  done  for 
the  extension  of  American  commerce  in 
Far  Eastern  countries. 

'It  is  important, '  he  said  in  a  letter 
to  Mr.  Griscom,  "to  save  the  commer- 
cial interests  of  the  United  States  from 
being  entirely  wiped  from  the  Pacific 
Ocean  in  the  future,"  and  ''the  way  to 
find  out  what  is  best  to  be  done  is  to 
start  something."  This  proposal  to 
"start  something"  was  characteristic 
of  Mr.  Harriman's  methods.  He  did 
not  think  it  necessary  to  perfect  all  the 
details  of  a  plan  before  going  to  work. 
When  he  had  clearly  defined  the  object 
to  be  attained,  his  policy  was  to  "start 
something,"  and  then  work  out  the 
scheme  in  accordance  with  circumstances 
and  conditions  as  they  might  arise. 
The  clearly  defined  object  that  he  had  in 
view  in  this  case  was  the  extension  of 
American  influence  and  the  promotion  of 

4 


FAR  EASTERN  PLANS 

American  commerce  in  the  Far  East; 
but  beyond  this,  with  the  details  not 
yet  worked  out,  was  a  plan  for  a  round- 
the-world  transportation  line,  under 
unified  American  control,  by  way  of 
Japan,  Manchuria,  Siberia,  European 
Russia  and  the  Atlantic  Ocean.  Such 
a  railroad  and  steamship  line,  if  success- 
fully established,  would  unite  for  com- 
mercial purposes  four  of  the  most  popu- 
lous countries  on  the  globe;  and  would 
enable  the  United  States  not  only  to 
take  a  commanding  position  in  the  Ori- 
ent, but  to  supply  the  wants  and  direct 
in  some  measure  the  commercial  activi- 
ties of  hundreds  of  millions  of  people 
in  the  least  developed  parts  of  Europe 
and  Asia. 

To  most  observers  at  that  time  a 
round-the-world  transportation  line,  un- 
der American  management,  would  have 
seemed  an  unrealizable  dream;  but  Mr. 
Harriman  had  made  many  of  his  visions 

5 


E.  H.  HARRIMAN'S 

come  true,  and  he  believed  that  he  could 
give  objective  reality  to  this  one.  His 
plan  was,  first,  to  secure  control  of  the 
South  Manchuria  Railway,  which  Japan, 
through  the  fortunes  of  war,  had  just 
acquired  from  Russia.  This  road  was 
then  in  a  very  unsatisfactory  physical 
condition;  but  Mr.  Harriman  proposed 
to  reconstruct  and  reequip  it,  with  Amer- 
ican capital,  and  make  it  the  eastern 
part  of  his  proposed  trans  Asiatic  line. 
Having  secured  this  essential  link,  he 
intended  to  buy  the  Chinese  Eastern, 
which  he  thought  the  Russians,  having 
lost  Port  Arthur,  would  gladly  sell, 
and  then  acquire  transportation  or 
trackage  rights  over  the  trans-Siberian 
and  the  Russian  Government  roads 
from  North  Manchuria  to  the  coast  of 
the  Baltic  Sea.  These  acquisitions, 
in  connection  with  the  Pacific  Mail 
Steamship  Company  and  the  American 
railroad  systems  that  he  already  con- 
6 


FAR  EASTERN  PLANS 

trolled,  would  give  him  a  continuous 
line  more  than  three  quarters  of  the  way 
around  the  globe,  and  it  would  be  a 
comparatively  easy  matter,  thereafter, 
to  connect  up  the  termini  by  establish- 
ing a  line  of  steamers  across  the  Atlantic 
from  the  United  States  to  Russia.  "^He 
anticipated  most  difliculty  in  persuading 
the  Japanese  to  surrender  or  share  the 
control  of  the  South  Manchuria  road, 
which,  \\'ith  the  Fushun  coal  fields  ad- 
jacent thereto  and  the  southern  part 
of  the  island  of  Saghalin,  were  all  that 
they  had  been  able  to  get  from  Russia, 
by  way  of  indemnity,  to  cover  their 
colossal  war  expenditures.  However, 
he  had  strong  hope  of  success,  for  the 
reason  that  the  Japanese  were  heavily 
in  debt  and  urgently  in  need  of  capital 
for  the  improvement  of  their  transpor- 
tation facilities  and  the  development 
of  their  recently  acquired  territory  on 
the  Asiatic  mainland.       The  purchase 

7 


E.  H.  HARRIMAN'S 

of  the  Chinese  Eastern  and  the  acquire- 
ment of  the  necessary  rights  over  the 
trans-Siberian  he  regarded  as  compara- 
tively easy.  Russia  had  allowed  a 
Baltimore  capitalist  to  build  and  man- 
age her  first  railroad,  from  St.  Peters- 
burg to  Moscow,  and  had  even  asked  an 
American  engineer  to  finance  and  con- 
struct the  great  road  from  the  Urals 
to  the  Pacific.^  It  seemed  probable, 
therefore,  that  the  Czar  would  gladly 
make  concessions  to  American  capital- 
ists if,  with  their  aid,  he  could  have  the 
trans-Siberian  line  double-tracked,  prop- 
erly equipped,  and  efficiently  managed. 

*The  proposal  to  finance  and  build  the  trans-Siberian 
railway  was  made  by  the  Russian  Government  to 
a  well-known  railroad  engineer  in  the  United  States.  The 
terms  offered  were  liberal,  but  the  amount  of  capital 
required  was  so  great  that  it  could  not  be  obtained 
without  the  aid,  or  at  least  the  good  will,  of  the  Jewish 
bankers  and  financiers  in  Europe.  They,  incensed  by 
the  treatment  of  their  people  in  Russia,  declined  to 
cooperate,  and  the  American  engineer  found  it  impossible 
to  organize  a  syndicate  that  would  be  strong  enough 
to  finance  the  enterprise. 


FAR  EASTERN  PLANS 

Preparations  for  the  trip  to  the  Orient 
were  begun  in  July  and  were  soon  com- 
pleted. The  party  as  made  up  con- 
sisted of  Mr.  and  Mrs.  Harriman,  with 
their  daughters  Cornelia,  Mary  and 
Carol  and  their  sons  Averell  and  Ro- 
land; Mr.  and  Mrs.  Robert  Goelet; 
Mr.  R.  P.  Schwerin,  vice  president  of 
the  Pacific  Mail  Steamship  Company; 
and  Dr.  W.  G.  Lyle,  Mr.  Harriman's  per- 
sonal physician.  They  sailed  from  San 
Francisco  on  the  steamship  Siberia 
August  1 6th  and,  after  short  stops  at 
Honolulu  and  Midway  Island,  arrived  in 
Yokohama  on  the  evening  of  August 
31st. 

The  reception  given  to  Mr.  Harriman 
by  Japanese  officials,  financiers  and 
business  men  was  extremely  cordial. 
Representatives  of  the  Bank  of  Japan 
and  the  famous  Mitsui  Company 
boarded  the  steamer  as  soon  as  the 
anchor  was  down,  and  when  the  party 

9 


E.  H.  HARRIMAN'S 

had  landed  and  taken  quarters  at  the 
Grand  Hotel,  calls  and  assurances  of 
welcome  were  received  from  the  presi- 
dent and  vice  president  of  the  Yoko- 
hama Specie  Bank;  the  president  of  the 
Industrial  Bank  of  Japan;  the  manager 
of  the  Japan  Steamship  Company; 
Count  K.  Inou  e  one  of  the  "Elder 
Statesmen";  Baron  Iwasaki,  Senator 
Watenabe  and  Mr.  K.  Mori,  a  personal 
representative  of  the  Minister  of  Finance. 
In  Tokyo  on  the  following  day,  calls 
from  distinguished  Japanese  continued, 
and  invitations  to  dinners,  lunches, 
garden  parties  and  other  hospitable 
entertainments  were  received  from  Prince 
Fushimi,  Prime  Minister  Katsura,  the 
Minister  of  Finance,  Count  Inouye, 
Baron  Iwasaki,  Baron  Shibusawa  and 
many  prominent  business  men.  On  the 
4th  of  September,  Minister  Griscom  gave 
a  dinner  at  the  legation,  in  honor  of 
Mr.  Harriman  and  his  party,  which  was 


FAR  EASTERN  PLANS 

attended  by  the  most  eminent  officials 
and  statesmen  in  the  Japanese  capital, 
including  the  Premier,  the  Minister  of 
the  Imperial  Household,  the  Minister 
of  Communications,  the  Vice  Minister 
of  Foreign  Affairs,  the  Vice  Grand  blas- 
ter of  Ceremonies,  Count  Inouye,  Count 
Toda,  and  Viscount  Inaba.  In  re- 
sponding to  a  toast  at  this  banquet,  Mr. 
Harriman  hinted  at  the  plans  that  he 
had  in  mind  and  prepared  the  way  for 
future  negotiations  by  saying  to  the 
Japanese  guests : 

You  have  made  great  strides  in  the 
art  of  war;  but  you  must  look  to  the 
arts  of  peace  for  those  greater  achieve- 
ments which  mean  prosperity,  content- 
ment and  happiness.  Your  people  will 
advance  their  material  welfare  still 
further  and  more  rapidly  as  they  realize 
the  advantages  which  follow  concentra- 
tion of  effort  and  harmony  of  operation 
in  their  industrial  and  commercial  af- 
fairs.    From  New  York  to  the  Pacific 

II 


E.  H.  HARRIMAN'S 

Coast,  and  from  there  to  Japan,  about 
ten  thousand  miles,  the  railroad  and 
steamship  lines  are  practically  under 
one  control  and  one  management.  The 
economies  of  operation,  the  comfort 
to  the  traveling  public,  and  the  advan- 
tages to  shippers  of  this  concentrated 
control  can  be  readily  appreciated. 
The  benefits  to  the  people  of  the  United 
States  which  follow,  directly  and  in- 
directly, are  incalculable.  The  same 
policy,  if  followed  in  Japan,  is  bound  to 
produce  the  same  results.  I  hope  the 
day  may  not  be  far  distant  when  Japan- 
ese business  men  and  American  business 
men,  realizing  that  their  interests  are 
common,  may  be  brought  into  closer 
relationship. 

This  was  a  sufficiently  clear  indication 
of  Mr.  Harriman's  purpose  to  unite, 
if  possible,  the  transportation  systems 
of  America  and  the  Far  East;  but,  un- 
fortunately, circumstances  at  that  time 
were  such  as  to  make  the  accomplish- 
ment of  this  purpose  unusually  difficult. 

12 


FAR  EASTERN  PLANS 

The  general  outlines  of  the  Portsmouth 
treaty  had  just  been  published  in  Japan, 
and  the  common  people,  ignorant  of 
their  Government's  real  situation,  were 
intensely  dissatisfied  with  the  terms  of 
peace.  Their  armies,  they  reasoned, 
had  won  every  battle  in  which  they  had 
been  engaged,  and  their  country  was 
clearly  entitled  to  exact  an  indemnity 
from  Russia,  and  to  demand  the  restora- 
tion of  the  whole  of  the  island  of  Sag- 
halin.  The  action  of  their  Government 
in  making  peace,  apparently  at  the 
suggestion  of  President  Roosevelt,  with- 
out securing  the  legitimate  fruits  of  vic- 
tory, was  an  unpardonable  exhibition 
of  weakness  for  which  it  deserved  to  be 
condemned  and  punished. 

No  hostile  demonstrations  were  made 
against  Americans,  but  on  the  fourth 
day  after  Mr.  Harriman's  arrival,  an 
immense  mob  of  patriotic  rioters  at- 
tacked the  residence  of  the  Home  Min- 

13 


E.  H.  HARRIMAN'S 

ister,  and  when  they  were  opposed  by 
the  poHce,  began  destroying  poHce  sta- 
tions, pohce  kiosks,  and  street  cars 
in  all  parts  of  the  city.  Doctor  Lyle 
and  Mr.  Harriman's  private  secretary, 
while  on  their  way  to  dinner  at  the  resi- 
dence of  the  Finance  Minister,  attempted 
to  pass  in  jinrikishas  through  the  crowd 
and  quickly  became  involved  in  diffi- 
culties. The  rioters  were  in  a  mood 
to  resent  almost  anything,  and  raising 
the  cry  of  "Russians! "  they  began  hoot- 
ing and  throwing  stones.  Doctor  Lyle 
was  struck  on  the  shoulder  and  slightly 
hurt,  but  he  and  his  companion,  after 
some  delay,  succeeded  in  reaching  safely 
the  Finance  Minister's  house.  Although 
this  attack  did  not  seem  to  be  directed 
against  Doctor  Lyle  and  Secretary 
McKnight  as  Americans — it  was  too 
dark  to  see  who  they  were — the  Govern- 
ment thought  it  prudent,  at  the  end  of 
the  dinner,  to  send  Mr.  Harriman  and 
14 


FAR  EASTERN  PLANS 

his  party  back  to  the  legation  under  the 
protection  of  an  armed  escort,  and  to 
post  guards  in  the  legation  grounds. 

On  the  following  evening,  September 
6th,  as  the  street  disorder  still  continued, 
a  dinner  in  honor  of  Mr.  Harriman  at 
the  Nobles'  Club  was  abandoned,  for 
the  reason  that  the  Club  happened  to 
be  situated  near  the  residence  of  the 
Home  Minister,  which  was  the  storm 
centre  of  mob  violence.  Fearing  that 
the  known  agency  of  President  Roose- 
velt as  an  intermediary  in  the  peace 
negotiations  might  turn  the  hostility 
of  the  uninformed  but  excited  populace 
toward  Americans  in  general,  and  wish- 
ing to  relieve  Minister  Griscom  as  far 
as  possible  from  anxiety  and  responsi- 
bility, Mr.  Harriman  decided  to  take 
his  party  to  Nikko  for  a  few  days,  and 
to  return  to  Tokyo  when  the  Govern- 
ment should  have  suppressed  the  dis- 
order and  reestabhshed  normal  condi- 

15 


E.  H.  HARRIMAN'S 

tions.  On  the  afternoon  of  September 
7th,  in  a  special  train  furnished  by  the 
Nippon  Railway  Company,  the  Harri- 
man  party  proceeded  to  Nikko,  where 
they  arrived  about  7  p.m.  In  the  course 
of  the  two  days  that  they  spent  in  this 
famous  resort,  they  visited  the  ancient 
temples  and  the  mausolea  of  leyasu 
and  lemitsu;  rode  through  the  cele- 
brated avenue  of  giant  cryptomeria 
trees,  and  ascended  the  wild  and  ro- 
mantic gorge  which  leads,  at  a  height 
of  4,300  feet,  to  the  beautiful  mountain 
lake  of  Chuzenji.  Learning  by  tele- 
graph that  the  disorder  in  Tokyo  had 
ceased,  they  returned,  September  nth, 
to  the  American  legation,  and  on  the 
following  day  Mr.  Harriman,  Mr.  Goelet 
and  Mr.  Schwerin  were  received  in  au- 
dience by  the  Emperor. 

As  Mr.  Harriman  could  spend  only 
a  limited  time  in  the  Far  East,  and  as 
he  desired,  before  his   return,  to  visit 
16 


FAR  EASTERN  PLANS 

China  and  Korea,  he  was  obHged  to 
promote  his  round-the-world-line  enter- 
prise, as  far  as  it  could  be  promoted  in 
Tokyo,  by  a  "whirlwind  campaign" 
of  visits  and  interviews.  Between  the 
ist  and  13th  of  September,  he  made  the 
acquaintance  of  all  the  prominent  states- 
men in  Japan,  including  Marquis  Ito, 
Count  Okuma,  the  Premier  and  most 
of  the  ministers;  and  succeeded  in 
awakening  the  interest  and  enhsting 
the  support  of  several  eminent  finan- 
ciers, including  especially  Mr.  J.  Soy- 
eda,  President  of  the  Japanese  Indus- 
trial Bank.  Having  thus  accomplished 
all  that  it  was  possible  to  accomplish 
in  a  few  days,  he  and  his  party  started 
on  the  13th  of  September  for  Kyoto 
and  Kobe,  leaving  further  negotiations 
for  the  acquirement  of  the  South  Man- 
churia Railway  in  the  capable  hands 
of  Minister  Griscom  and  President 
Soyeda. 

17 


E.  H.  HARRIMAN'S 

As  Mr.  Harriman's  visit  to  China  and 
Korea  in  the  latter  part  of  September 
and  the  first  part  of  October  had  no  de- 
cisive bearing  upon  the  negotiations 
that  chiefly  engaged  his  thoughts,  it 
need  not  be  fully  described.  Charter- 
ing for  his  party  at  Kobe  the  commo- 
dious steamer  Ohio  III,  he  sailed 
through  the  Inland  Sea  and  across  Korea 
Bay  to  Port  Arthur;  visited  the  battle- 
fields that  had  given  to  the  fortress  its 
world-wide  fame,  and  then  proceeded 
to  Tientsin  and  Peking.  Leaving  the 
Chinese  capital  on  the  28th  of  Septem- 
ber, the  party  again  crossed  the  Gulf  of 
Pechili  and  Korea  Bay,  landed  at  Che- 
mulpo, and  went  by  rail  to  Seoul,  where 
they  attended  a  luncheon  given  in  their 
honor  at  the  Imperial  Palace  and  a 
garden  party  arranged  by  Mr.  T. 
Megata,  financial  adviser  of  the  Korean 
Government.  On  the  8th  of  October 
they  took  a  special  train  to  Fusan,  at 
18 


FAR  EASTERN  PLANS 

the  end  of  the  peninsula,  where  the 
Ohio  III  met  them  and  carried  them  to 
Nagasaki.  After  inspecting  the  ship- 
building plant  and  dry  docks  in  this 
famous  seaport,  they  sailed  again  for 
Kobe,  proceeded  thence  by  rail  to  Yoko- 
hama, and  on  the  9th  of  October  finally 
returned  to  Tokyo,  thus  completing  a 
journey  that  covered  about  three  thous- 
and miles  and  occupied  twenty-six  days. 
During  Mr.  Harriman's  absence,  Min- 
ister Griscom  did  all  that  could  be  done 
to  promote  what  seemed  to  him  the 
best  interests  of  the  United  States  in  the 
Orient  by  persuading  the  higher  Jap- 
anese authorities  to  consider  favorably 
Mr.  Harriman's  plans.  In  his  inter- 
views with  Premier  Katsura,  Count 
Inouye  and  the  Minister  of  Finance, 
he  took  the  ground  that  cooperation 
with  America  would  be  in  every  way 
profitable  to  Japan,  by  strengthening 
her  credit,  furnishing  her  with  capital 

19 


E.  H.  HARRIMAN'S 

for  the  improvement  of  her  transporta- 
tion system,  facilitating  her  trade,  and 
enabling  her  to  develop  quickly  and 
fully  the  material  resources  of  her  re- 
cently acquired  territory  on  the  Asiatic 
mainland.  The  South  Manchuria  Rail- 
way was  urgently  in  need  of  reconstruc- 
tion and  reequipment,  and  there  was  no 
man  in  America,  perhaps  in  the  world, 
better  qualified  by  experience  and  abil- 
ity to  direct  such  work  than  the  re- 
builder  of  the  Union  Pacific.  Mr.  Har- 
riman's  relations,  moreover,  with  Amer- 
ican bankers  and  financiers  were  such 
that  he  could  secure  at  once  the  pecuni- 
ary support  which  Japan  needed,  but 
which  she  alone  might  not  be  able  to 
get  quickly  enough  to  meet  the  emer- 
gencies of  the  situation.  The  suggested 
project  would  bring  Japan  and  the 
United  States  into  much  closer  rela- 
tions, both  commercially  and  polit- 
ically, and  if  successful  it  would  furnish 
20 


FAR  EASTERN  PLANS 

a  large  revenue  to  the  Japanese  Govern- 
ment and  thus  compensate  the  Japanese 
people  for  their  failure  to  get  a  pecuni- 
ary indemnity  from  Russia. 

In  his  negotiations  with  the  higher 
authorities,  Mr.  Griscom  was  ably  as- 
sisted by  Mr.  Durham  W.  Stevens,  who 
had  been  in  the  service  of  the  Japanese 
Government  for  more  than  twenty  years, 
and  who  had  earned  the  respect  and 
trust  of  all  the  Emperor's  statesmen 
and  officials.^  The  result  of  their  joint 
efforts  was  in  every  way  encouraging. 


'Mr.  Stevens  entered  the  service  of  the  Japanese 
Government  in  1883,  as  counsellor  of  its  legation  in 
Washington.  He  was  soon  afterward  transferred  to 
Tokyo,  where  he  became  a  member  of  the  Bureau  du 
Protocol  of  the  Conference  for  the  Revision  of  Treaties 
between  Japan  and  Foreign  Powers.  Between  1887 
and  1904  he  was  engaged  in  various  diplomatic  negoti- 
ations, and  in  the  latter  year  he  was  appointed  adviser 
to  the  Korean  Government  at  Seoul.  He  was  assassin- 
ated in  San  Francisco  in  igo8  by  a  misguided  Korean 
fanatic  who  regarded  him  as  an  enemy  of  the  Korean 
people,  although,  in  reality,  he  had  always  been  their 
sincere  friend. 

21 


E.  H.  HARRIMAN'S 

Premier  Katsura  said  that  he  would 
give  the  matter  immediate  and  serious 
consideration,  and  Count  Inouye,  one 
of  the  most  influential  of  the  Elder 
Statesmen,  promised  that  he  would  call  a 
meeting  of  the  Minister  of  Finance,  the 
Minister  of  Communications,  and  other 
high  officials  directly  interested,  and 
would  try  to  reach  a  decision  at  once. 
Count  Inouye  himself  was  very  favor- 
ably impressed  and  said  to  Mr.  Griscom: 
*'We  would  be  very  foolish  to  let  such 
a  great  chance  slip." 

When  Mr.  Harriman  returned  to 
Tokyo,  on  the  8th  of  October,  negotia- 
tions were  so  far  advanced  that  the 
authorities  were  ready  to  consider 
promptly,  if  not  to  accept,  a  definite 
proposition;  and  in  three  or  four  days 
of  strenuous  activity  he  succeeded  in 
getting  the  details  settled  and  reduced 
to  writing  in  the  following  memoran- 
dum of  agreement: 

22 


FAR  EASTERN  PLANS 

MEMORANDUM  of  a  preliminary 
understanding,  dated  October  12,  1905, 
between  His  Excellency  Count  Katsura 
Taro,  representing  the  Japanese  Gov- 
ernment, and  Mr.  E.  H.  Harriman, 
representing  himself  and  associates. 

A  syndicate  to  be  formed  to  provide 
capital  for  the  purchase  of  the  South 
Manchuria  Railway,  acquired  by  the 
Japanese  Government,  and  its  appur- 
tenances; the  rehabilitation,  equip- 
ment, reconstruction  and  extension  of 
the  same,  and  the  completion  and  im- 
provement of  the  terminals  at  Tairen 
(Dalny);  and  it  is  understood  that  the 
two  parties  are  to  have  joint  and  equal 
ownership  in  the  properties  acquired. 
Permission  to  work  coal  mines  (in  con- 
nection with  the  railroad)  to  be  given 
to  a  corporation  by  special  agreement, 
in  which  there  shall  be  joint  interest  and 
representation. 

The  principle  of  development  of  all 
industrial  enterprises  in  Manchuria  shall 
be  such  that  each  party  shall  have  the 
right  to  an  equal  interest  with  the  other. 
The  Manchurian  railroad,  with  its  ai>- 

2i 


E.  H.  HARRIMAN'S 

purtenances,  rails,  cross  ties,  bridges, 
superstructure  of  all  character,  stations, 
buildings,  platforms,  warehouses,  docks, 
wharves,  etc.,  to  be  taken  at  their  true 
value,  to  be  determined  by  joint  repre- 
sentation of  each  party. 

The  organization  to  be  made  on  basis 
that  will  meet  exigencies  and  conditions 
as  they  may  exist  at  the  time.  As  it 
is  deemed  advisable  to  meet  the  condi- 
tions in  Japan,  the  corporation  is  to  be 
operated  with  Japanese  control.  Changes 
are,  however,  to  be  made  therein  from 
time  to  time  as  far  as  circumstances 
will  permit,  looking  toward  a  final 
equalization  of  representation  and  con- 
trol. The  corporation  is  to  be  organized 
under  Japanese  law.  Mr.  Harriman, 
having  agreed  for  himself  to  operation 
through  a  Japanese  company,  the  only 
open  question  is  as  to  his  associates  agree- 
ing thereto,  which  he  believes  they  will. 

To  provide  for  an  arbitrator,  it  is 
agreed  that  Mr.  Henry  W.  Denison 
shall  be  appointed  to  fill  that  place.  ^ 

iMr.  Denison,  at  that  time,  had  been  legal  adviser  of 
the  Japanese  Foreign  OfiSce  for  about  a  quarter  of  a 

24 


FAR  EASTERN  PLANS 

In  case  of  war  between  Japan  and 
China,  or  Japan  and  Russia,  the  rail- 
road shall  at  all  times  obey  the  instruc- 
tions of  the  Japanese  Government  in 
the  matter  of  the  conveyance  of  troops 
and  war  materials,  and  the  Japanese 
Government  is  to  compensate  the  rail- 
road for  services  rendered  and  protect 
it  against  agressions  at  all  times. 

It  is  agreed  that  Mr.  J.  Soyeda,  Presi- 
dent of  the  Industrial  Bank  of  Japan, 
shall  be  the  medium  of  communication 
between  the  parties  hereto. 

The  including  of  any  outside  interests 
(other)  than  the  parties  hereto  shall  be 
done  only  after  conference  and  mutual 
agreement. 

With  this  memorandum  of  agreement 
in  his  possession,  Mr.  Harriman  sailed 
from  Yokohama  in  the  steamship  5f- 

century.  He  had  been  repeatedly  decorated  by  the 
Emperor  for  distinguished  service,  and  enjoyed  the 
implicit  trust  of  both  Government  and  people.  He  was 
born  in  Guildhall,  Vt.,  in  1846  and  received  his  higher 
education  in  the  Columbian  (now  George  Washing- 
ton) University. 

25 


E.  H.  HARRIMAN'S 

beria  on  the  afternoon  of  Friday,  October 
1 2th.  He  had  not  accomplished  all 
that  he  desired  to  accomplish,  but  he 
had  at  least  "started  something,"  and 
there  seemed  to  be  a  fair  prospect  that 
the  concession  thus  obtained  would 
ultimately  lead  to  the  consohdation  of 
Japanese  and  American  transportation 
interests  on  the  Asiatic  mainland,  and 
greatly  extend  and  promote  the  com- 
merce of  the  United  States  in  that  part 
of  the  Orient. 

Unfortunately,  while  Mr.  Harriman 
was  at  sea,  on  his  way  to  San  Francisco, 
all  his  Far  Eastern  plans  were  suddenly 
blocked  by  an  obstacle  that  he  had 
neither  foreseen  nor  considered.  Three 
days  after  he  sailed  from  Yokohama, 
Baron  Komura,  the  Japanese  Minister 
of  Foreign  Affairs,  returned  to  Tokyo 
from  the  United  States,  bringing  the 
treaty  that  he  and  Minister  Takahira 
had  just  negotiated  with  the  Russian 
26 


FAR  EASTERN  PLANS 

plenipotentiaries  at  Portsmouth.  As 
soon  as  the  Harriman-Katsura  agree- 
ment for  joint  control  of  the  South 
Manchuria  Railway  was  shown  him, 
he  said:  "It  cannot  possibly  be  carried 
out,  because  it  is  inconsistent  with 
Article  VI  of  the  treaty  that  we  have 
just  made  with  Russia."  The  article 
in  question  provided  that  the  transfer  of 
the  South  Manchurian  road  from  Russia 
to  Japan  should  be  made  only  with  the 
consent  of  the  Chinese  Government. 
Until,  therefore,  such  consent  should  be 
obtained,  Japan  had  no  legal  rights  that 
could  be  shared  with  Mr.  Harriman. 
Aside  from  this,  Baron  Komura  was 
opposed  to  the  Harriman-Katsura  agree- 
ment on  its  merits.  The  Japanese  peo- 
ple were  already  so  dissatisfied  with  the 
Portsmouth  treaty  that  they  had  re- 
sorted to  mob  violence  as  a  protest 
against  it,  and  their  discontent  would  be 
greatly  increased  if  they  should  learn 
27 


E.  H.  HARRIMAN'S 

that  their  Government  had  sold  to  a 
Japanese-American  syndicate  nearly  all 
that  they  had  gained  in  two  years  of  suc- 
cessful war.  To  have  made  peace  with- 
out securing  a  pecuniary  indemnity  was 
bad  enough;  but  to  sell  more  than  half 
the  fruits  of  their  victory  to  the  Ameri- 
cans, and  thus  throw  open  to  foreign 
competition  the  commercial  field  which 
they  had  bought  with  their  treasure  and 
blood  would  seem  to  them  intolerable. 

Baron  Komura's  arguments  and  in- 
fluence were  too  strong  for  the  support- 
ers of  the  Japanese- American  agreement, 
and  in  less  than  a  week  a  change  of  policy 
was  decided  upon.  When  Mr.  Harri- 
man,  with  his  mind  full  of  plans  for 
the  future,  arrived  in  San  Francisco,  he 
received  from  the  Japanese  consul  there 
the  following  note : 

"  I  beg  to  inform  you  that  I  have  been 
instructed  by  Count  Katsura,  of  my  Gov- 

28 


FAR  EASTERN  PLANS 

ernment,  to  deliver  the  following  mes- 
sage to  you  immediately  upon  your 
arrival  in  San  Francisco : 

"'The  Japanese  Government  have 
found  it  necessary  to  institute  a  more 
thorough  investigation  and  examination 
of  the  questions  which  are  the  subject 
of  memorandum  of  October  12, 1905,  and 
they  consequently  request  you  to  regard 
the  memorandum  as  in  abeyance  until 
they  are  able  to  communicate  with  you 
more  fully  regarding  the  matter.'" 

Ten  days  later,  when  Mr.  Harriman 
had  reached  New  York,  he  received  the 
following  cable  message  from  Mr.  J. 
Soyeda,  President  of  the  Industrial 
Bank  of  Japan: 

Tokyo,   October  30,   1905. 
E.  H.  Harriman 

New  York. 

Prime  Minister  requests  to  forward 
following  confidential  message  to  you 
explanatory  message  handed  you  by 
Japanese  consul  San  Francisco: 

29 


E.  H.  HARRIMAN'S 

"Having  considered  detailed  report 
made  by  Minister  Foreign  Affairs  on 
his  return  home,  and  having  in  view 
pacific  attitude  Chinese  Government 
on  railroad  question,  Japanese  Govern- 
ment has  come  to  conclusion  that  ques- 
tion embodied  in  memorandum,  October 
1 2th  requires  more  thorough  and  com- 
plete examination  than  possible  at  pres- 
ent time.  As  you  are  aware,  Ports- 
mouth treaty  provides  for  consent  of 
China  regarding  transfer  to  Japan  of 
railroad  property,  and  for  agreement 
with  Russia  regulating  connecting  rail- 
road service.  Until  agreements  with 
China  and  Russia  are  concluded,  im- 
possible to  determine  precisely  what 
rights  and  properties  are  included  in  the 
transfer,  or  what  earning  capacity  of 
railroad  is  likely  to  be.  Without  full 
knowledge  on  these  points  impossible 
to  make  definite  arrangements  for  work- 
ing railroad  and  property  which  would 
prove  satisfactory  to  either  Japanese 
Government  or  E.  H.  Harriman.  Con- 
sequently Japanese  Government  deem 
wise  request  E.  H.  Harriman  to  regard 

30 


FAR  EASTERN  PLANS 

said  memorandum  as  in  abeyance  for 
the  time  being.  Japanese  Government 
will  proceed,  as  soon  as  possible,  to 
conclude  necessary  international  agree- 
ment. Such  agreement  will  probably 
necessitate  some  essential  change  in 
proposed  arrangement  with  IMr.  Harri- 
man.  But  in  any  event,  Japanese  Gov- 
ernment will  consult  him  before  making 
arrangement  with  private  capital." 

SOYEDA. 

This  cable  message  was  the  result  of 
a  compromise  between  Baron  Komura 
and  the  supporters  of  the  Harriman- 
Katsura  memorandum.  The  former  ad- 
vocated immediate  cancellation  of  the 
agreement,  for  the  reason  that  it  was 
inconsistent  with  Article  VI  of  the 
Portsmouth  treaty.  In  view,  however, 
of  all  the  circumstances,  and  especially 
of  Katsura's  ignorance  of  the  stipulation 
regarding  Chinese  consent,  Baron  Ko- 
mura agreed  to  regard  the  memorandum 
as  "in  abeyance,"  and  to  leave  open  the 

31 


E.  H.  HARRIMAN'S 

possibility  of  confirmation  at  a  later 
time,  provided  no  objection  should  be 
raised  by  the  Government  of  China. 

If  the  Japanese  Minister  of  Foreign 
Affairs  had  been  previously  consulted, 
and  had  favored  the  agreement  on  its 
merits,  he  might  possibly  have  found 
some  means  of  dealing  with  the  Chinese 
complication;  but  he  had  never  met  Mr. 
Harriman  and  had  not  been  impressed, 
as  had  his  colleagues,  by  the  latter's 
forceful  personality;  he  doubted  the 
expediency  of  sharing  control  of  the 
South  Manchurian  road  with  a  syn- 
dicate about  which  he  knew  little 
or  nothing;  and  he  believed  that  the 
agreement,  if  allowed  to  go  into  ejffect 
at  that  time,  would  increase  his  own 
unpopularity  in  Japan,  and  would  ren- 
der extremely  difficult,  if  not  wholly 
impossible,  the  negotiation  of  the  treaty 
with  China  that  he  then  had  in  con- 
templation.   He  therefore  insisted  upon 

32 


FAR  EASTERN  PLANS 

postponement,  at  least,  and  the  other 
members  of  the  ministry  yielded. 

In  this  thwarting  of  Mr.  Harriman's 
plans  there  seems  to  have  been  no  inten- 
tional breach  of  faith  on  the  part  of  the 
Tokyo  authorities.  It  was  simply  a  case 
in  which  one  branch  of  the  Government, 
acting  independently,  concluded  a  treaty 
that  nullified  action  taken  almost  sim- 
ultaneously by  another  branch.  Count 
Katsura  did  not  know  that  Baron 
Komura  had  agreed  in  Portsmouth 
to  make  the  transfer  of  the  railroad  con- 
ditional upon  Chinese  consent,  while 
Komura,  in  concluding  such  agreement 
with  Russia,  was  ignorant  of  the  Tokyo 
memorandum.  One  compact  or  the 
other  had  to  be  set  aside,  and  in  holding 
the  Harriman  agreement  "in  abeyance" 
while  he  negotiated  with  China,  Baron 
Komura  thought,  perhaps,  that  he  was 
making  the  best  of  an  accidental  and 
unfortunate  situation.  But  be  that  as 
33 


E.  H.  HARRIMAN'S 

it  may,  he  started  for  Peking  with  Mr. 
Denison,  on  the  6th  of  November,  leav- 
ing the  raihoad  matter  in  this  unsettled 
state. 

Negotiations  with  the  Government 
of  China  for  a  new  treaty  occupied  more 
than  a  month,  and  Mr.  Harriman  was 
not  informed  of  the  result  until  the  15  th 
of  January  1906,  when  he  received  from 
Mr.  Soyeda  the  following  cable  message : 

Tokyo,  January  15,  1906. 
E.  H.  Harriman, 

New  York. 

Baron  Komura  returned  on  the  ist 
of  January  and  the  new  Cabinet  was 
formed  on  the  7th.  I  have  been  urging 
the  necessity  of  informing  you  what  to 
be  done,  and  am  now  asked  to  wire  you. 
Count  Katsura  requests  me  to  let  you 
know  that  obtaining  from  China  con- 
sent contemplated  by  Article  VI  Ports- 
mouth, N.  H.,  treaty  it  was  necessary  to 
provide  that  Manchurian  railway  should 
be  worked  by  company  composed  ex- 
clusively of  Japanese  and  Chinese  share- 

34 


FAR  EASTERN  PLANS 

holders,  following  in  that  respect  terms 
of  original  concession  to  Russia.  Count 
desires  me  to  convey  expression  of  regret 
that,  in  view  of  above  circumstance,  he 
is  compelled  to  ask  you  regard  memor- 
andum of  October  12,  1905  as  of  no 
effect,  as  it  is  manifestly  impossible  to 
make  any  arrangement  based  on  it. 
He  adds,  however,  that  the  Japanese 
Government  entertain  a  doubt  as  to 
possibility  of  Japanese  and  Chinese 
capital  alone  being  sufficient  to  meet 
requirements  of  necessary  improvements 
and  extension  of  Manchurian  railway, 
and  that  therefore  should  an  occasion 
arise  in  future  enabling  them  to  open 
negotiations  with  foreign  capitalists,  on  a 
different  basis,  a  fresh  consultation  may 
be  held  with  you.  I  desire  to  add  Count 
has  been  reUeved  of  his  position  as 
Prime  Minister,  and  send  this  telegram 
after  consulting  with  Marquis  Saionji, 
his  successor. 

SOYEDA. 

In  a  letter  written  to  Minister  Gris- 
com  in  January,  1906,  Mr.  H.  W.  Deni- 

35 


E.  H.  HARRIMAN'S 

son,  legal  adviser  of  the  Japanese  For- 
eign Office,  gave  the  following  explana- 
tion of  Baron  Komura's  failure  to  get 
the  consent  of  China  to  the  Harriman- 
Katsura  agreement: 

"The  Japanese  Government  have  se- 
cured the  consent  of  China  to  the  as- 
signment of  the  railroad  (the  South 
Manchurian)  between  Port  Arthur  and 
Chang-chun,  subject  to  the  same  terms 
and  conditions  that  attached  to  the 
original  grant  to  Russia;  that  is  to  say, 
the  railroad  is  to  be  worked  by  a  com- 
pany composed  exclusively  of  Japanese 
and  Chinese  shareholders.  You  will 
find  the  original  concession  to  Russia 
in  Rockhill's  book  'Treaties  and  Con- 
ventions with  and  concerning  China 
and  Korea,'  pp.  207-224,  and  I  enclose 
a  newspaper  copy  of  the  official  version 
of  Baron  Komura's  agreements  with 
China.  ...  If  the  Chinese  avail 
themselves  of  the  opportunity  of  taking 
half  a  share  in  the  Manchurian  enter- 
prises, a  definite  understanding  on  the 

36 


FAR  EASTERN  PLANS 

basis  of  the  memorandum  of  October 
1 2th  is  impracticable.  There  is  at  the 
present  time  a  very  strong  anti-con- 
cession wave  sweeping  over  China. 
The  Government  are  endeavoring,  by 
hook  or  by  crook,  to  get  back  the  grants 
already  made.  They  cancel  the  con- 
cessions in  case  of  default  in  any  direc- 
tion, and  they  buy  back  the  grants  if  no 
grounds  for  cancellation  exist.  In  this 
frame  of  mind,  and  being  unable  to  can- 
cel or  repurchase  the  Manchurian  con- 
cessions, it  is  more  than  likely  that  China 
will  gladly  take  the  one-half  interest  in 
the  enterprise.  In  that  case  I  believe 
some  arrangement  on  new  lines  will  be 
possible,  but  only  if  the  negotiations  are 
undertaken  by  a  man  of  force  and  pres- 
tige like  Mr.  Harriman." 

In  the  spring  of  1906,  Mr.  Jacob  H. 
Schiff,  of  the  firm  of  Kuhn,  Loeb  &  Co., 
happened  to  visit  the  Far  East  and,  at 
the  request  of  his  old  friend  and  associ- 
ate, Mr.  Harriman,  made  an  attempt  to 
revive  the  1905  agreement;  but  Baron 

37 


16047J 


E.  H.  HARRIMAN'S 

Komura  was  as  much  opposed  to  it  as 
ever,  and  after  a  number  of  conferences 
the  negotiations  were  again  dropped. 

Thus  ended  Mr.  Harriman's  attempt 
to  get  control,  or  partial  control,  of  the 
South  Manchuria  Railway,  as  an  essen- 
tial Hnk  in  his  projected  round-the- 
world  transportation  line.  His  ill  suc- 
cess, however,  did  not  shake  his  faith 
in  the  practicabiUty  of  the  enterprise, 
but  merely  led  him  to  consider  other 
means  of  bridging  the  gap  between  the 
Gulf  of  Pechili  and  the  trans-Siberian 
road.  The  difficulties  in  the  way  were 
very  great.  A  new  and  independent 
Hne  through  Manchuria  or  Mongolia 
could  not  be  built  without  Chinese  con- 
sent, and  the  Chinese,  at  that  time,  were 
strongly  opposed  to  the  granting  of  any 
more  railroad  concessions  to  foreign 
syndicates.  So  far,  moreover,  as  a  line 
through  Manchuria  was  concerned,  they 
themselves  were  almost  powerless,  for 

38 


FAR  EASTERN  PLANS 

the  reason  that,  in  the  treaty  of  Decem- 
ber, 1905,  with  Japan,  they  had  agreed 
**not  to  construct  any  main  hne  in  the 
neighborhood  of  and  parallel  to  the  South 
Manchuria  Railway."  Even,  there- 
fore, if  they  had  been  willing  to  let  Mr. 
Harriman  build  a  road  from  the  Gulf 
of  Pechili  to  the  terminus  of  the  Chinese 
Eastern,  they  could  not  do  so,  because 
it  would  necessarily  be  a  ''main  line  in 
the  neighborhood  of  and  parallel  to  the 
South  Manchurian." 

Mr.  Harriman  thought,  at  one  time, 
of  building  a  road  across  the  Gobi 
Desert  by  the  old  caravan  route,  passing 
through  Kalgan  and  Urga  and  connect- 
ing with  the  trans-Siberian  near  Irk- 
utsk; but  as  the  distance  would  be 
great — 1,200  miles  or  more — and  as 
most  of  the  country  to  be  traversed 
was  so  barren  as  to  promise  little  in  the 
way  of  agricultural  development,  this 
scheme  was  soon  dismissed  as  imprac- 
39 


E.  H.  HARRIMAN'S 

ticable.^  The  only  alternative  was  a 
new  line,  about  four  hundred  and  fifty 
miles  in  length,  from  the  Gulf  of  PechiU 
to  the  trans-Siberian  Railway  at  Tsit- 
sihar.  This  road,  although  nearly  par- 
allel with  the  South  Manchurian,  would 
be  separated  from  it  by  an  average  dis- 
tance of  one  hundred  and  seventy  miles, 
and  consequently  would  not  be  in  the 
prohibited  "neighborhood." 

In  the  early  part  of  1906,  Mr.  Harri- 
man  received  full  reports  on  the  trade, 
industry  and  resources  of  northeastern 
China  from  Colonel  Holabird  and  Mr. 
Wallace,  two  experts  whom  he  had  sent 
to  make  investigations  in  the  Far  East; 
and  in  that  and  the  following  year  he 

^It  is  not  certain,  however,  that  even  this  Hne  would 
have  been  unprofitable.  The  Chinese  themselves  after- 
ward began  the  construction  of  four  hundred  miles  of 
railway  along  this  route,  and  on  the  Peking-Kalgan 
section,  which  was  completed  in  191 2,  the  net  profits 
of  operation  in  19 13  were  twenty  per  cent,  on  the  in- 
vestment. 

40 


FAR  EASTERN  PLANS 

was  kept  fully  informed  with  regard  to 
railroad  affairs  in  Siberia  and  Manchuria 
by   Mr.   Willard   D.   Straight,   Consul    ^ 
General  of  the  United  States  at  Mukden,  i    "y-^-  ynA   i 
For  a  year  or  more,  no  opportunity  to    ^^<.  ^.  %ua 
promote    the    Far    Eastern    enterprise  S  J   If 

'Mr.  Straight  was  a  young  graduate  of  Cornell  Uni- 
versity whose  acquaintance  Mr.  Harriman  made  in 
October,  1905,  at  the  house  of  Edward  Vernou  Morgan, 
American  minister  to  Korea.  Mr.  Straight  was  then 
Vice  Consul  General  in  Seoul,  but  he  had  previ- 
ously been  correspondent  of  Renter's  Agency  and  the 
Associated  Press  in  Korea  and  Manchuria  and  had  spent 
two  years  in  the  service  of  the  Chinese  Imperial  Mari- 
time Customs  at  Nanking  and  Peking.  He  impressed 
Mr.  Harriman  as  a  young  man  of  character  and  force, 
and  one  whose  ability  and  experience  might  make  him 
a  valuable  assistant  in  such  an  enterprise  as  that  which 
was  then  in  contemplation.  When  the  American  lega- 
tion in  Seoul  was  closed,  in  the  fall  of  1905,  Mr.  Straight 
went  with  Minister  Morgan  as  private  secretary,  and 
when  Mr.  Morgan  was  appointed  minister  to  Cuba  in 
1906,  he  accompanied  him  to  Havana.  A  few  months 
later  the  State  Department  transferred  him  to  China  and 
made  him  Consul  General  at  Mukden.  On  his  way  back 
to  the  Far  East,  in  the  summer  of  1906,  he  spent  a  week- 
end at  Arden,  where  Mr.  Harriman  discussed  with  him 
the  railroad  situation  in  Manchuria  and  arranged  to 
keep  in  touch  with  him  by  means  of  correspondence. 

41 


E.  H.  HARRIMAN'S 

presented  itself,  but  in  September,  1907, 
Lord  Ffrench,  representing  Pauling  & 
Co.,  of  London,  and  Mr.  J.  O.  P.  Bland, 
representing  the  "British  and  Chinese 
Corporation,"  secured  from  the  Chinese 
Government  the  right  to  extend  the 
Chinese  Imperial  Railway  from  Hsin- 
min-tun  to  Fakumen,  with  the  privilege 
of  building,  ultimately,  to  the  trans- 
Siberian  at  Tsitsihar.  As  this  seemed 
to  open  the  way  for  such  a  Russian  con- 
nection as  Mr.  Harriman  had  in  view, 
Mr.  Straight  wrote  him,  in  September 
1907,  suggesting  an  alliance  with  the 
British  syndicate,  as  a  means  of  securing 
the  essential  link  in  the  projected 
round-the-world  line  without  the  coop- 
eration of  the  Japanese.  Mr.  Harriman 
replied  by  cable,  however,  in  October 
1907,  that,  owing  to  the  panic  of  that 
year,  financial  conditions  were  such  as 
to  prevent  the  raising  of  the  necessary 
fimds. 

42 


FAR  EASTERN  PLANS 

In  the  summer  of  1908,  when  the 
financial  situation  in  the  United  States 
had  somewhat  improved,  Mr.  Harriman 
decided  to  make  another  move  in  the 
Far  East,  and  requested  Secretary  Root 
to  recall  Consul  General  Straight,  in 
order  that  American  capitaUsts  might 
discuss  with  him  the  expediency  of 
making  a  loan  to  China  for  agricultural 
development  and  railroad  construction 
in  Manchuria.  Meanwhile  Mr.  Straight 
had  secured  from  Tang  Shao-yi,  the 
Chinese  governor  at  Mukden,  a  signed 
memorandum  of  agreement  which  was 
to  form  the  basis  of  negotiations  for  a 
loan  of  $20,000,000.  With  this  sum 
it  was  proposed  to  establish  a  Manchur- 
ian  Bank,  which  should  cooperate  with 
American  and  Chinese  interests  in  the 
construction  of  a  railway  from  Tsitsihar 
to  Aigun.  Then,  if  the  bank  and  the 
American  capitalists  could  come  to  an 
agreement  with  Pauling  &  Co.  who  had 

43 


E.  H.  HARRIMAN'S 

the  right  to  build  a  road  southward  from 
Tsitsihar  to  Hsin-min-tun,  it  would  be 
possible  to  construct  a  trunk  line  from 
the  Gulf  of  Pechili  to  the  Amur,  and 
thus  bridge  the  gap  between  the  Pacific 
Ocean  and  the  trans-Siberian  road. 

In  September,  1908,  Consul  General 
Straight  returned  to  the  United  States, 
bringing  with  him  the  memorandum  of 
agreement  with  Tang  Shao-yi  for  the 
$20,000,000  loan.  Through  the  influ- 
ence of  Mr.  Harriman,  and  with  the 
cognizance  and  approval  of  the  Secre- 
tary of  State,  Kuhn,  Loeb  &  Co.,  agreed 
to  undertake  this  loan,  provided  all  the 
details  thereof  could  be  satisfactorily 
arranged.  Late  in  November,  Tang 
Shao-yi  came  to  Washington,  ostensibly 
to  thank  President  Roosevelt  for  the 
remission  of  part  of  the  Boxer  indemnity, 
but  really,  in  great  part,  to  negotiate 
the  proposed  loan  for  the  estabhshment 
of  the  Manchurian  Bank. 
44 


FAR  EASTERN  PLANS 

Here  again,  however,  Mr.  Harriman's 
plans  were  blocked  by  events  that  could 
not  possibly  have  been  foreseen.  Tang 
Shao-yi's  appointment  had  been  made 
through  the  influence  of  his  friend  Yuan 
Shi-kai,  who  was  then  Grand  Councillor 
and  head  of  the  Chinese  Foreign  Office, 
and  who  was  greatly  interested  in  se- 
curing American  capital  for  the  develop- 
ment of  Manchurian  resources.  About 
the  middle  of  November,  1908,  both  the 
Emperor  and  the  Empress  Dowager  of 
China  died,  and  Prince  Chun,  an  enemy 
of  Yuan  Shi-kai,  became  regent.  This 
undermined  Yuan's  power,  and  led,  a 
few  weeks  later,  to  his  dismissal  from 
ofhce.  Tang  Shao-yi,  thus  left  without 
support  at  home,  became  discouraged, 
and  the  matter  of  the  loan  was  allowed 
to  drop. 

Mr.  Harriman,  however,  continued 
his  negotiations  for  the  acquirement  of  a 
Manchurian  Hne,  both  with  Russia  and 

45 


E.  H.  HARRIMAN'S 

again  with  Japan.  In  the  summer  of 
1909,  after  he  was  stricken  with  mortal 
illness,  he  secured  a  promise  from  the 
Russian  Minister  of  Foreign  Affairs,  Mr. 
Kokovtsef ,  that  upon  the  latter's  return 
from  a  trip  that  he  was  about  to  make 
to  the  Far  East,  he  would  recommend 
the  sale  of  the  Chinese  Eastern  Railway 
to  American  interests.  But  even  this 
partial  success  came  too  late.  On  the 
9th  of  September  Mr.  Harriman  died, 
and  there  was  no  one  left  in  America 
capable  of  undertaking,  much  less  of 
carrying  through,  such  a  colossal  enter- 
prise as  the  establishment  of  a  round- 
the-world  American  transportation  line. 
Whether  the  "Master  Builder"  himself 
could  have  accomplished  it,  if  he  had 
lived,  it  is  impossible  to  say;  but  the 
results  of  successful  accompHshment 
might  have  influenced  profoundly  the 
world's  history.  No  one  who  has  stud- 
ied Mr.  Harriman's  constructive  and 
46 


FAR  EASTERN  PLANS 

administrative  methods  can  doubt  that 
if  he  had  ever  acquired  even  partial 
control  of  the  trans-Siberian  railway, 
he  would  have  doubled  or  trebled  its 
carrying  capacity.  Then,  when  the 
great  war  of  1914  came,  Russia  would 
have  been  able  to  draw  heavy  artillery 
and  ammunition  from  Japan  and  Amer- 
ica over  an  efl5cient  through  line  of  great 
capacity,  and  would  not  have  been  re- 
duced to  such  straits  as  she  was  when 
her  troops,  largely  without  proper  weap- 
ons and  almost  wholly  without  reserves 
of  ammunition,  were  forced  out  of 
Poland  and  driven  half  way  to  Petro- 
grad.  Her  defeats  in  the  war  with 
Japan  in  1904-5  were  mainly  due  to  the 
inadequacy  of  the  trans-Siberian  road 
as  a  means  of  speedy  transportation, 
and  her  reverses  on  the  German  frontier, 
ten  years  later,  were  due,  in  part  at 
least,  to  the  same  cause.  During  the 
winter  and  spring  of  every  year,  the  rail- 

47 


FAR  EASTERN  PLANS 

road  to  the  Pacific  was  her  only  open 
line  of  communication  with  the  outside 
world,  and  it  never  was  in  physical  con- 
dition to  meet  the  demands  made  upon 
it.  If,  reconstructed  and  reequipped 
by  Mr.  Harriman  and  the  American 
syndicate,  it  had  been  made  part  of  a 
great  international  transportation  sys- 
tem, it  might  have  become  the  decisive 
factor  in  the  struggle  with  Germany 
in  1914-1915,  and  might  thus  have 
changed  the  earlier  stages,  if  not  the 
whole  course,  of  the  great  world  war. 


48 


THE  COUNTRY  LIFE  PRESS 
GARDEN  aTY,  N.  Y. 


LOS  ANGELES,  CALIFORNIA  90095-1388 


Return  this  material  to  the  library  from  which  it  was  borrowed. 


k.    \I\JV    \J\f>J    UO**    9 


UC  SOUTHERN  REGIONAL  LIBRARY  f  ACILITY 

i|iii|iii|iii|iii||iiiiii||iiii  III  I  mil  II 111111111 


AA    001  011  592      1 


CN  A 


